Marine CNG Readies for World Gas Trade

While oil prices have fallen by half, steel and natural gas prices have tumbled 70% to 75%, giving marine CNG proponents wide margins in which to finance their first commercial projects. Will they succeed this time?

News of two projects to transport large volumes of compressed natural gas (CNG) via ship have surfaced in recent weeks, as two Canadian competitors compete for what would be the world’s first full-scale marine CNG project.  On June 25, Medcarrier, a joint venture among Egyptian Natural Gas (EGAS), Arabia Gaz of Egypt and Copelouzos, announced that it would use technology from Calgary-based Sea NG Corp. to transport gas from Egypt to the Greek Island of Crete. Crete’s nearest shoreline is about 370 km (200 nautical miles) from Western Egypt.  Proved reserves in Egypt have been rising with new gas field discoveries. Major energy companies, such as BP, BG, Eni, and Shell, are actively exploring for and finding gas and condensate offshore and in the Western Desert. Discoveries have included some large reservoirs like the recent gas and condensate field discovered in March in the Abu Qir concession off Alexandria, the Satis field found by BP and Eni last year, and the more recent Dana Gas Sondos field.

While Dave Stenning, president and CEO of Sea NG, declined to comment on the Egypt to Crete project   specifically, he did admit that CNG developers have toiled many years (decades) to get to this stage of readiness.

“Yes, it has been a very long time, and I am extremely pleased [with the project]” Stenning wrote in an e-mail. He and Jim Cran founded the company in the early 1990s, and shortly thereafter came close to selling their first project to Enron before that company folded.  Since then, Sea NG has had many close calls, but none have crossed the finish line.

The Sea NG design is based on what the company calls a “Coselle,” which is a 17-km coil of 168mm (6-inch) diameter line pipe wrapped in a carousel, thus the name. Standard 6-inch line pipe was chosen for the reason that it is widely available and therefore cost competitive.  When pressurized to 20 bar (~3,200 psig), each Coselle can contain approximately 3.3 million standard cubic feet of gas.  Ships can be configured to carry 15 to 150 Coselles (50 million to 500 million standard cubic feet).  "We expect to see more than one CNG project initialized within nine months," Stenning told this publication. "From a financing perspective, smaller projects like CNG have become relatively more attractive than large multi-billion dollar projects.”

Asia CNG

Meanwhile, halfway around the world in Vietnam, Sea NG’s competitor, TransCNG International, which is a joint venture between TransCanada and Overseas Shipholding Group, was reported in June to be tendering for construction of a small fleet of CNG ships.

“Four Asian shipyards are vying to build a fleet of CNG vessels destined for Vietnam,” Upstream staff reported June 19. Shipyards in South Korea and China had submitted “provisional technical bids for four new-build vessels” that would transport gas from PetroVietnam’s Dai Hung field, the report stated. 

The Dai Hung (Big Bear) oilfield, which is about 260 km (~140 nautical miles) offshore, is believed to contain associated gas reserves of some 300 Bcf. To the north (see Figure 4 map), in the Bach Ho (White Tiger) field, which is Vietnam’s largest oilfield, 300 Bcf is believed to have been flared. 

With demand for gas-fired power generation having grown tenfold in little more than a decade to 200 Bef (5.7 Bcm) per year, Vietnamese officials do not wish to waste more associated gas.

For this reason, Vietnam Oil and Gas Group and the Petrovietnam Exploration Production Corp. Ltd. (PVEP) signed a production-sharing contract in June for block 05.1(a), Nam Con Son basin offshore Vietnam. If they are successful, more associated gas will be produced that can be brought ashore with TransCNG International’s technology.

“We realized early that a ship does not make money unless it is transporting gas,” said Gary Stephen, director of CNG business development at TransCanada. “A ship that sits and loads for days and days makes no sense.”

For this reason, TransCNG International’s ship designs are smaller relative to Sea NG’s.  TransCNG’s ships range from 35 to 90 million standard cubic feet. The design represented in Figure 7 would contain up to 500 fiber-wrapped cylinders, what Stephen calls a composite-reinforced pressure vessel, with capacity of approximately 90 million cubic feet. 

With four ships, the company can conceivably deliver 90 MMcfd per day, assuming each ship loads and unloads in 24 hours.

Lessons from the Road

As with Sea NG, the TransCNG design is based on modular containers that can be used for many shiphull configurations. TransCNG modular containers, however, are straight tubes, which also are designed for over-the-road transport trailers. The trailers are identical in diameter to the units intended for ships; however, the trailer tubes are half the length. 

Between 50 and 60 trailers have been built by a Trans-Canada technology licensee, Floating Pipeline Co. at its Saint John, New Brunswick, manufacturing facility (see Figure 6 photo), since beginning operation in 2007.

 “The composite-reinforced pressure vessels on transport trailers undergo more severe service than the units on ships will,” said Greg Cano, director of CNG business development at TransCanada. “The units on truck trailers are filled to higher pressures at 240 bar (3,600 psi) and discharged twice daily. The ones on ships will be filled to 227 bar (3,400 psi) and discharged once every three to four days.

Economics

According to Cano and Stephen, TransCNG is most interested in projects where low-value gas is available near markets that consume expensive petroleum-based fuels. A survey by this publisheridentified some 150 power plants worldwide that continue to consume oil or distillate at prices higher than $12/MMBtu.

By accessing associated gas that is flared, proponents have margins as great as $10/MMBtu in which to develop their supply chains. Proponents of CNG have long promoted their technology as economically superior to liquefied natural gas (LNG) for smaller fields offering feed streams of 50 to 200 MMcfd within 100 to 250 nautical miles of a high-value market. Their argument is that CNG technology offers developers a tool for certain gas fields that neither pipelines nor LNG can monetize.

Other Projects

The Vietnam and Crete projects are the third and fourth in a string that have surfaced in the past year. Others being advanced are in Namibia and Brazil. At least three technology suppliers remain highly active: Sea NG, TransCanada, and Knutsen OAS.

Knutsen in late 2008 announced that it had signed a contract with the Brazilian oil company, Petrobras, to carry out a front-end engineering and design (FEED) study for transport of associated gas from a floating oil production ship using what Knutsen calls its pressurized natural gas (PNG) technology.

“Large water depths and short distances to shore make our PNG technology especially well suited there,” Trygve Seglem, Knutsen’s managing director, said. “The same applies to areas in the Mediterranean.”